Sorouh Gates construction – courtesy Sorouh

Aldar, the company that developed Abu Dhabi’s Yas Marina Formula One race circuit, has been massively funded by the government there.  With recent EU economic woes increasing, and the price of oil stagnant, its the companies are a bit “on the ropes” as far as potential profitability and liquidity are concerned. Goldman Sachs and the National Bank of Abu Dhabi are leading talks over the proposed merger, while Credit Suisse advises Aldar, and Morgan Stanley works with Sorouh individually. Challenges remain regardless of any talks however, the country being faced with ever increasing suppl-demand concerns regarding their property holdings.

Shares of the two companies jumped a bit on the news of a potential merger Aldar still being up 35.9 percent year-to-date and Sorouh up 36 percent, according to reports. On a final note here, if attention to a corporate website means anything at all, Aldar’s new one, plus the fact that there has been no press release posted on the old one in a year, shows a company focused elsewhere beyond growth for us. Aldar’s last press release spoke of the Abu Dhabi Education Council penning a deal with the property group in October of 2011.

As for the most recent construction project reports, this PDF from the firm shows a bit of where those billions are tied up. Not to be too critical, but throwing money into such projects as YAS Water World Abu Dhabi at a time when most of the world cannot afford lunch, this is not exactly gripping investment potential.

As for Sorouh, the news front is slightly better online visibility wise at least. The company website shows a release having been made for the completion of the world’s tallest bridge structure of a penthouse at ey residential development. We’re not sure exactly who keeps records of such world records, but Richard Amos, the company’s CFO, looks as if he’s lost some sleep in the 2012 report given below. Not to sound too critical, sometimes the little signs add up to a lot in these matter. It remains to be seen if the two companies will merge, and whether or not any such merger can result in black ink for those concerned.

MENA countries badly need affordable housing © mev1973 - Fotolia.com

The most populated country in this region is Egypt, and Jones Lang LaSalle estimates the shortfall there could be as high as 1.5 million homes. Morocco is estimated to need around 600,000 homes, while Iraq needs around 1 million housing units. This problem isn’t just confined to less wealthy countries, as even Saudi Arabia needs 400,000 more affordable homes.

The report in Kuwait Times highlights the fact that lack of affordable housing was one of the reasons for the turmoil which has affected the region this year. The problem is that although many of these countries have seen their GDP expand impressively over the last few years, most of the wealth has gone to those who are already rich, while lower earners have seen their pay stagnate, and there have also been insufficient new jobs created. With much of the wealth being confined to the top earners, most of the developers have concentrated on building luxury homes.

Many in this region are still relatively poor, but the population is expanding rapidly, increasing the need for new, affordable homes. Most of the new homes already built are beyond the reach of people on average incomes, and those who can afford to pay a mortgage are finding difficulty in obtaining finance. Property prices in Algeria cost around 30 times the average annual salary, while in Egypt this figure is 18.4 times. To put this into perspective, the average US home is only 2.8 times the average annual salary.

Saudi Arabia’s government has already set aside around $130 billion, which is about 30% of its annual economic output, to be spent on social projects including homes. The interim government in Egypt has ordered the housing ministry to oversee the construction of 1 million affordable units by 2015, but this target may prove a little optimistic as it would mean finishing 550 homes each day.

Aerial view of Benoy's Ferrari World Abu Dhabi, UAE

Aabar Properties is engaged in key developments such as; Al Reem Island, Al Raha Beach, Saraya and Rawdhat, among the many others. Other major payers will also unveil and exhibit at the event. UK architectural firm, Benoy, has been behind the Yas Island Concept Massterplan and Ferrari World Abu Dhabi as well. This unique project will be discussed by Lead Designer and Middle East Director Mike Lewis.

Inside the state of the art ADNEC venue

International companies have also cited the event as a prime platform, including UK architectural firm, Benoy, who was responsible for the design behind the Yas Island Concept Masterplan and Ferrari World Abu Dhabi (aerial image top), a thrilling brand experience and multi-sensory celebration of a true design icon. The Lead Designer and Director of Middle East, Mike Lewis, will be available during Cityscape Abu Dhabi to discuss this unique project. Be sure and check out their Ferrari World e-Brochure here.  Interestingly, attendees of the VIP tour of this project get a chance to ride the world’s fastest roller coaster. Lewis had this to say about the upcoming event and Benoy’s role:

“The Middle East is a region which has gone from strength to strength for Benoy and Cityscape Abu Dhabi has frequently provided a very useful platform for us to communicate directly with key industry audiences. This year, we look forward to being able to showcase the first completed development of ours in the region, Ferrari World Abu Dhabi, at the event. Aside from presentations on our stand, we will be taking interested parties on a behind the scenes tour of what is considered to be the centerpiece of the 25km2, Yas Island mega scheme.”

And Chris Speller, Group Director of Cityscape Abu Dhabi, which will be held at Abu Dhabi National Exhibition Centre (below), offered this: “It is fantastic to see that regional and international real estate companies are looking to Abu Dhabi with such a positive and business minded view. Exhibitors are still keeping announcements under their hats but activity levels are high and we are expecting a very vocal four days this year.”

Abu Dhabi National Exhibition Centre just after completion

For those unfamiliar, Benoy is one of the world’s largest and most respected architectural firms. The company, founded by Gordon Benoy as a small architectural company, has grown to prominence with projects around the world, and design studios in design studios in the UK, Abu Dhabi, Hong Kong, Shanghai and Singapore.

Among the other exhibitors at this years conference; Mubadala Real & Estate & Hospitality, Al Qudra, Aldar, Baniyas, Sorouh, TDIC, ICT, DMA and Burooj, just to name a few. As far as we know, there are still sponsorship opportunites as well as booths and places for the event. For futher information, please consult the official press, or the official website. Alternatively, readers can contact the organizers via:

Susan Parker or Laura Smith
Fifth Ring Integrated Communications: +971 4 372 0100
susanp@fifthring.com / +971 50 101 4403
laura@fifthring.com/ +971 56 799 1642

The Real Estate Development and Investment Commission, an industry regulatory arm there, is reported to be finalizing tender books for 12 projects which will be a major boost for the country’s economy. General Manager Yasser al-Sibai had this to say about the projects:

“We invite more investors to establish companies in Syria and participate in the tendering process, which will be announced in some two months. Newly established companies are advised to merge in order to meet our development plans.”

Syria branches out, a view from the magical mountains - courtesy Taras Kalapun

The first private developer ever granted a license by the commissions was last year, and since then some 24 companies have set up shop in Syria. Before 2010, most of the real estate projects were run by state owned entities.

The need for new housing units inside Syria is actually quite drastic. Over half a million are projected before 2015, according to the reports. There is room for business in all the channels from venture capital flow down to jobs created for workers inside the country. So far foreign investment in Syria has been modest, at or about 35 percent.

With these official calls for developers and investment, this number can only be expected to increase substantially. Still, the trouble in Egypt, Tunisia, Libya, and other Arab nations can effect this as well.

Moving forward, Syria invites developers

And too, initiatives like this one indicate an overall bending of policy toward more free markets. Syria has not exactly been known for forward thinking, but these announcements make it fairly clear the winds of change are having an effect. The Syrian cabinet has been busy of late mending fences and reaching out to other states like Turkey.

And, Prime Minister Mohammad Naji Otri just affirmed last week the necessity to shore up the  development process. Bashar al-Assad’s government clearly wants to move forward.

Original Source: Bloomberg

One of Al Khor's world class football stadiums

Two acquisitions Barwa Real Estate made in 2010, contributed significantly to their astounding bottom line. Adding Qatar Real Estate Investment Company and 60 percent of Barwa Al Khor added even more profitability and reach for one of the world’s biggest real estate, banking, and construction players.  With Qatar’s bid for FIFA 2022, a the three stadiums in Khor (image above) will be expanded, and 9 more will be added to support this and other International events. (see the Qatar 2022 stadium video below)

Barwa's Board led by Ghanim Bin Saad Al Saad

On the heals of a very profitable year, Barwa announced that it plans to hold an initial public offering for its Barwa Bank this year as well. A developer group only five years old, Barwa set out on a series of strategic deals last year with the intention of enhancing its position in the regional property sector. This can be seen as a direct competition with Dubai’s Emaar Properties, among other big developers in the region.

More recently, Barwa has ventured outside the box to invest in projects in Turkey, Russia, and Saudi Arabia. The developer has also invested in Egypt’s New Cairo City Project, that is expected to be worth $9 billion when it is completed in 2023. Abbas Shafiei, managing director at Engel & Volkers in Doha, had this to say about Barwa.

“Barwa is a strong company. They are doing a lot of major projects inside the country and they have several billions of dollars invested outside of Qatar.”

Barwa Bank acquired two financing companies last year, under the hopes that it would draw investor interest if the initial public offer happens this year 2011. Regional unrest is seemingly the only thing working against Barwa right now. Shares closed 5.5 percent lower on Wednesday at 31.50 rials on investor concerns about the regional unrest. Consequently, Barwa’s shares closed down 5.5% to QR 31.5 yesterday in Doha, even on the good news.